The popular 60/40 balanced portfolio (60% equities, 40% fixed income) has been a staple for many investors through their lifetimes and deservingly so. According to a recent piece by M. Batnick, 60/40 portfolios have boasted an annualized rate of return of 7.5% and positive rolling five-year returns in 99.4% of cases over the past half…
Tag: Long-Term Returns
The Intricacies of Commodity ETFs
The collapse of oil prices in mid-April garnered quite a bit of media attention given that oil traded (and settled) in negative territory on April 20th. One of the main catalysts for this historic day was the fact that storage in Cushing, Oklahoma – where physical delivery of oil takes place – was scarce. To…
Volatility, A Skewed Reality
BLOG SERIES: UNDERSTANDING RISK
Volatility drag – or how volatility exacerbates the divergence between arithmetic returns and geometric returns – is something that is often debated by investment managers and investors alike. A common argument is that while higher volatility increases your downside, it can also increase your potential upside and therefore it may be rational to be risk-seeking to some extent. Another argument is that with a long enough time horizon, investors don’t actually need to worry about volatility, because they can tolerate the ups and downs of the market.
Volatility, What a Drag
BLOG SERIES: UNDERSTANDING RISK
Over the past couple of months, investors of all types have likely been caught off guard by global events that caused massive swings in the market value of their portfolio holdings. Unfortunately, some have realized that their investments were far too risky and have lost more than they could tolerate. The old gambler’s adage of not risking more than you are willing to lose holds true for investors as well – but how do we know how much is really at risk?
Why You Should Hold Bonds
The most recent pullback in equity prices due to uncertainty around COVID-19 has resulted in another leg lower for bond yields as investors clambered to gain exposure to the safety of fixed income products. The steady march lower in yields is once again prompting market participants to question how much lower yields can go, and…
Diversification Performance Through the Panic
If you have been following financial markets, even casually since February, you would know that we are in the midst of one of the fastest and sharpest equity market drawdowns in history. Although it may feel like the financial world is on the brink of collapse, a recent article by Ben Carlson of A Wealth…
Avoiding the Zeros
Games involving strategy can be classified into two buckets: winner’s games or loser’s games. The difference is that a “winner’s game” victor utilizes superior maneuvers to overwhelm opponents, whereas a “loser’s game” victor avoids fatal errors and self-sabotage. Investing has been labeled the latter type, discussed further in a recent article titled “Avoiding the Zeros.”…